© AT&S (illustration purpose only) PCB | May 12, 2017

AT&S: revenue up 6.8%, EBIT down 91.4%

For AT&S the financial year 2016/17 was a year with a very positive revenue development. At the bottom line, however, the year was characterised by the longer start-up phase of the IC substrate plant in China and price pressure in a highly competitive environment.
Andreas Gerstenmayer, CEO of AT&S, commented: “The financial year 2016/17 was challenging on our path to our new positioning – from a high-end printed circuit board producer to a provider of high-end connectivity solutions. We are quite satisfied with the development of revenue: high capacity utilisation, continued stable demand in the core business and the first contributions to revenue from Chongqing helped us generate record revenue. Once again, we significantly outperformed the entire market, which declined during the same period. Profitability in the core business is still high, which shows that we are positioned in the right markets with the right customers."

"The partial upgrade of the Shanghai plant to the next technology generation is proceeding well. However, the start-up of the IC substrate plant in China kept us very busy: by the end of the financial year, the plant for IC substrates had not yet reached the planned output and efficiency level due to technical challenges with the equipment. We have largely resolved the technical issues and clearly improved operationally. Unfortunately, significant price pressure in the area of IC substrates overcompensate this development. The semiconductor industry, which we supply with IC substrates, leaves technology generations in the market for longer than in the past, and demand for the relevant applications such as desktop computers and notebooks continued to decline. We are working on appropriate solutions and are still convinced that this is the right step for profitable growth of AT&S in the future.”

AT&S increased revenue by 6.8 percent from EUR 762.9 million to EUR 814.9 million in the reporting period as core business was still growing and first revenues were generated with IC substrates, and thus slightly exceeds the forecast for the year.

Based on the start-up effects for the Chongqing project (EUR 71.2 million) and continued price pressure, especially in the area of mobile devices, EBITDA decreased from EUR 167.5 million to EUR 130.9 million. As the Chinese renminbi was lower, exchange rate effects had a positive impact of EUR 26.0 million in EBIDTA. The EBITDA margin was at 16.1 percent and thus -5.9 percentage points below the very high prior-year level of 22.0 percent.

EBIT declined by EUR 70.4 million or -91.4 percent to EUR 6.6 million. The EBIT margin was 0.8 percent (previous year: 10.1 percent).

The profit for the year dropped from EUR 56.0 million in the previous year to a loss of EUR -22.9 million.

The increase in revenue by 6.2 percent to EUR 573.0 million in the Mobile Devices & Substrates segment is primarily based on revenue from Chongqing. Compared with the previous year, the segment’s EBITDA declined by EUR 57.9 million or -45.8 percent to EUR 68.5 million due to start-up effects of the Chongqing project, the substantial increase in price pressure on IC substrates and the lost capacities in the fourth quarter resulting from a partial upgrade of the Shanghai plant. The EBITDA margin amounted to 12.0 percent (previous year: 23.4 percent).

Status Chongqing

As at 31 March 2017, AT&S invested EUR 455.3 million in the Chongqing project. The significant operational improvements in the IC substrate plant, which had already been achieved, were overcompensated by price pressure. The second production line was started in December 2016 and is running according to plan. Both lines should reach the planned output and efficiency level in the second half of 2017. In plant 2, the first production line is being converted to the mSAP technology, while the second production line for mSAP is undergoing qualification.

Outlook for the financial year 2017/18

Provided that the macroeconomic environment remains stable and the USD-EUR currency relation stays at a similar level as in the past financial year, AT&S expects an increase in revenue of 10-16 percent for the financial year 2017/18. The EBITDA margin should range between 16-18 percent based on the market developments for IC substrates and the ramp of the new technology generation (mSAP). Higher depreciation for mainly new production lines of additional ~EUR 25 million in the financial year 2017/18 will impact EBIT.
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January 17 2019 2:20 pm V11.11.0-1